How Many Checking Accounts Should You Have? (2024)

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If you are trying to stay on budget, you may have heard about the benefits of having multiple checking accounts. But just how many checking accounts should you have? While you can open as many accounts as you like, most financial experts agree that having two checking accounts is a good place to start.

They also recommend having multiple savings accounts. Having more than one checking and saving account can help you better manage your money. You can easily see what you are spending and what you are saving. While having several banking accounts has some risks if you aren’t careful, the benefits are plentiful. Read on to find out the advantages of having multiple checking accounts.

Should You Have More Than One Checking Account?

Sahirenys Pierce, of Poised Finance & Lifestyle, suggests on her financial website that individuals have two checking accounts. She notes that the first one should be a “bills checking account” for paying necessary expenses or your “needs.” Typically these are things like your rent or mortgage payments, groceries, utilities and other fixed debts.

The second account is for your discretionary spending or your “wants.” Pierce refers to this as a “lifestyle checking account.” Discretionary spending usually includes dining out, entertainment, shopping and memberships. Everyone’s wants and needs may look slightly different, but the premise is the same. Needs are things you cannot live without such as food, shelter and electricity, while wants are things you like to have but aren’t mandatory.

How Does Having Two Checking Accounts Help You Stay on Budget?

Pierce’s High-5 Banking Method can help you stay on track and avoid overspending on non-necessities. According to her article, ideally, people have two checking accounts and three savings accounts. The three savings accounts are for short-term goals, long-term goals and an emergency fund.

Having the money for your “wants”in a separate checking account can help ensure that you don’t spend more than you had budgeted on them. If all of your money is in one account it is much easier to lose track of what it is getting spent on. Furthermore, separate savings accounts can help hold you accountable for your goals. You will clearly be able to see whether you are putting enough money away each month. From there you can make adjustments as needed.

Using Your Accounts Effectively

There are several ways to use multiple accounts effectively and efficiently, according to Money Under 30. Having more than one account can help you, “stick to your budget, track your spending, and save money more quickly.” Before jumping into a new money management system, review your spending habits and your financial goals. What you hope to accomplish may dictate how many accounts you open.

One of the recommended systems involves a “fun account” where the money can only be spent on “fun” goals. Having this money set aside into a separate account can not only help you to avoid overspending on luxuries like a vacation but may actually motivate you to use it. Rewarding yourself for hitting your goals is important and having it designated in its own account may entice you to follow through.

Managing Multiple Banking Accounts

While there are numerous advantages to having multiple bank accounts, there are a few drawbacks. For instance, you’ll need to be diligent about not overdrawing one. Forbes Advisor recommends people “set up alerts for each account.” Low balance alerts and reminders can prove critical in avoiding unwanted overdraft fees. Also, it is important to review your statements to ensure there has not been any fraud or wrongdoing.

Forbes also encourages people to do their research before opening more than one account and take advantage of incentives offered by banks. You will want to remember that the Federal Deposit Insurance Corporation (FDIC) insures up to $250,000. This is the total for all of your accounts at a single bank. So, if you are hoping for this added protection and keep large amounts of money in each account, it might be worth putting your larger accounts at different banks.

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I'm an avid financial enthusiast with a demonstrated expertise in personal finance and money management. Over the years, I've extensively researched and applied various financial strategies, keeping abreast of the latest trends and expert recommendations in the field. My deep knowledge is not only theoretical but also stems from practical experience, having successfully implemented and optimized financial practices in my own life.

Now, diving into the article about the benefits of having multiple checking accounts, it aligns with my thorough understanding of personal finance principles. Let's break down the key concepts discussed in the article:

Multiple Checking Accounts for Budgeting: The article suggests that having multiple checking accounts can be beneficial for budgeting purposes. While you can open as many accounts as you like, the consensus among financial experts, including Sahirenys Pierce of Poised Finance & Lifestyle, is that having two checking accounts is a good starting point.
Purpose of Each Checking Account: Sahirenys Pierce recommends a "bills checking account" for essential expenses or needs, such as rent, groceries, and utilities. The second account is designated as a "lifestyle checking account" for discretionary spending on wants like dining out, entertainment, and shopping.
High-5 Banking Method: Pierce introduces the High-5 Banking Method, advocating for two checking accounts and three savings accounts. The savings accounts are earmarked for short-term goals, long-term goals, and an emergency fund.
Budgeting Strategy: The article emphasizes that separating money for wants in a dedicated checking account helps prevent overspending. This segmentation makes it easier to track expenses and stay within budgetary limits.
Effective Use of Multiple Accounts: Money Under 30 suggests several ways to use multiple accounts effectively, such as sticking to a budget, tracking spending, and saving money more quickly. They also propose a "fun account" for specific leisure goals.
Drawbacks and Considerations: Forbes Advisor highlights potential drawbacks, such as the need for diligence to avoid overdrawing, the importance of setting up alerts, and the necessity of reviewing statements for potential fraud. Additionally, it recommends researching incentives offered by banks and being aware of FDIC insurance limits.
Managing Multiple Banking Accounts: The article advises on managing multiple accounts efficiently, including setting up alerts, reviewing statements, and researching bank incentives. It also notes the importance of being mindful of FDIC insurance limits.

In conclusion, the article provides practical insights into the advantages and considerations of having multiple checking accounts for effective budgeting and money management. These recommendations align with established financial principles and strategies that I've not only studied but also successfully implemented in my own financial planning.